Crude Oil
Oil prices were mixed on Tuesday as concerns about global crude oil demand and uncertainty over the latest round of U.S.-China trade talks countered investor optimism around tightening supplies. Brent crude slipped 5 cents to settle at $66.45 a barrel, hovering below its 2019 high of $66.83 reached on Monday. U.S. crude was up 50 cents to $56.09 a barrel, its highest since November 2018.
Traders were cautious about taking large new positions before the outcome of the US-China talks.
In a red flag about the economic outlook, Europe’s biggest bank HSBC warned it may delay some investments this year as it missed 2018 profit forecasts due to slowing growth in China and Britain.
In the meanwhile, Russian President Vladimir Putin and King Salman bin Abdulaziz Al Saud of Saudi Arabia, OPEC’s de facto leader, said they supported continued coordination on the global energy markets, the Kremlin said on Tuesday. Investors said the statement eased doubts that Russia would stick to the pact.
Naphtha
Asia’s naphtha crack for front-month first-half April rose 3.2 percent to a four-session high of $39.38 a tonne on Tuesday following a fall in crude prices. But naphtha fundamentals were seen weaker from a week ago as more cargoes from the West were provisionally booked for next month’s arrival.
Naphtha arriving in March from the West, including Europe, the Mediterranean and the United States are projected to be slightly above 1.9 million tonnes, well above 2018’s monthly average of up to 1.6 million tonnes. But coming cracker’s maintenance starting in March/April in Japan and South Korea may hit demand.
The March crack is higher at -$ 7.00 /bbl
Gasoline
The discount on Asian gasoline crack against Brent crude widened to 35 cents a barrel from the previous session at 23 cents due to growing supplies.
Iran has become self-sufficient in gasoline production, Iranian Oil Minister Bijan Zanganeh said on Monday after inauguration of the third phase of the Persian Gulf Star Refinery in the southern port city of Bandar Abbas. The refinery would produce 45 million litres of petrol per day.
Indonesia’s Pertamina on the other hand was looking to buy 88-octane grade gasoline for April to June delivery. It has a spot tender to buy up to 1.02 million barrels of the petrol grade for March delivery. Pertamina, also Asia’s top gasoline importer, has likely bought a total of some 550,000 barrels of 88-octane and 92-octane gasoline for February and March delivery recently but details on prices and sellers were not immediately clear.
The March crack is higher at $ 0.60 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10ppm sulphur content widened their discounts to 42 cents a barrel to Singapore quotes on Tuesday, compared with a discount of 37 cents a barrel on Monday.
Cash discounts for jet fuel were at 30 cents a barrel to Singapore quotes on Tuesday, compared with a 27-cents discount a day earlier.
The regrade, the price spread between jet fuel and gasoil, for March stood at a discount of 37 cents a barrel on Tuesday, as compared with 20 cents on Monday. The front-month regrade is currently at its weakest levels since October last year.
The March crack is lower at $ 13.90 /bbl with the 10 ppm crack at $14.85 /bbl. The regrade is at – $ 0.10 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Singapore 380-cst HSFO ex-wharf premiums extended losses on Tuesday, falling to multi-month lows amid ample supplies and sluggish demand for the main marine fuel. Demand for marine fuels typically slows in February, in line with the Lunar New Year celebrations across parts of Asia.
Ex-wharf premiums for the 380-cst fuel were at about $2-$3 per tonne to Singapore quotes so far this week, down from about $6-$7 a tonne in the previous week. The last time ex-wharf premiums were around current levels was in June last year.
The March180 cst crack has improved to $ 0.80 / bbl with the visco spread at $ 0.75 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh hedges for today.
Hedge recommendations are essentially made for refiners. These are not trading positions as such. The rationale of these positions is to lock in extraordinary levels for the refiner.
Click Here to see how all our recommendations have fared
About this blog
This blog post attempts to give a top level summary of the Singapore market goings on to a person who seeks to obtain a directional sense of the market on a daily basis.